LEONARDTOWN, Md. — St. Mary’s County Commissioner Michael L. Hewitt is raising concerns about what he describes as an inequity tied to the Town of Leonardtown’s practice of not charging a county excise tax on new home construction within town limits — a policy he says could result in significant lost revenue for the county.
Hewitt, speaking to fellow commissioners during a recent meeting on Dec. 16, said that Leonardtown’s annexation of county land and its exemption from charging the county’s excise tax on certain permits disadvantages other parts of the county where residents and developers must pay the fee.
“In instances where county land is annexed by the town and developed, those units are not subject to the excise tax,” Hewitt said in his remarks, noting that residents elsewhere in the county pay approximately $6,700 more per home in excise tax fees than those inside the town’s boundaries.
The excise tax, which replaced the previous impact fee system on July 1, 2023, helps fund public safety, schools, recreation and roads, Hewitt noted. He expressed concern that continued exemptions could deprive the county of millions of dollars in revenue over time. According to his estimates, if Leonardtown continues to allow certain large residential developments without collecting the excise tax, the county could miss an estimated $7 million to $8 million in revenue.
Hewitt also highlighted past instances where the town charged the county fees for county construction projects, such as impact fees on the jail renovation and fees associated with other county facilities, raising questions of fairness in how taxes and fees apply between jurisdictions.
While Hewitt urged dialogue with town officials to “understand their reasoning” and explore ways to resolve the issue, the meeting did not result in a formal directive or vote on how to address the excise tax exemption.
County officials have said the excise tax is a key part of the county’s revenue strategy following the shift from impact fees, helping to support essential services and infrastructure needs across St. Mary’s.
Hewitt’s remarks reflect ongoing discussions within St. Mary’s County government over how fees related to development are applied and how tax policy intersects with growth in municipalities such as Leonardtown.
You can watch Commissioner Hewitt’s brief below. The tax brief starts around 2 minutes and 51 seconds.
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What is the logic in giving the tax exemption? At face value of the article, it does not sound fair to those outside of the town limits.